Why BPOs Are Essential for Note Investors | Real Estate Notes Show

Episode: Nathan and Dave talk with Accurate Group BPO Dave's Goals and Plans: - Looking at lease options and commercial opportunities in PA, New Jersey, and Texas - Has California loans he's evaluating - In 2008 rented a car and drove through Ohio, Michigan, and Indiana to evaluate properties - Prefers not to take back properties 9 out of 10 times because it's less to deal with - Considering taking back properties more now due to rising property values Nathan's Goals and Plans: - Running a weekly Facebook mastermind group with members doing out-of-the-ordinary deals - Building up to a big reveal for internal asset opportunities - As a first note buyer, hardly gives borrower a second look - main concern is if they're living in the property - Experienced discovering properties on Google Maps that were actually missing or significantly damaged Key Recommendations: - Always get a physical BPO (broker price opinion) when buying notes outside your local area - Someone must physically lay eyes on the property - Google Maps and Bing Maps are often outdated - Order BPOs early in the delinquency process to understand disposition options - Compare property condition findings against online maps before committing to investment - Use BPOs not just for valuation but to discover occupancy status and condition issues that affect strategy Topics Discussed: - Importance of physical property due diligence for out-of-area note investing - Differences between first lien and second lien note focus (property vs.

borrower) - BPO services and broker price opinions - Property condition assessment and its impact on investment decisions - Disposition strategies based on property condition - How outdated online mapping can lead to bad investment decisions Guest Insights: - Brandon and Stacy from Accurate Group BPO explained BPOs include detailed photos from multiple angles, comparable sales analysis, and price conclusions from licensed real estate agents - Accurate Group is a nationwide AMC specializing in title evaluation, transitioning into note investment space after serving major banks - BPOs are used not only by individual investors but also by large capital market investors for portfolio management and trades - BPO agents discover important details like occupancy status, medical equipment (ramps), and other indicators missed in online research - 25-35% of BPO providers are actual brokers; most are real estate agents working under brokerage firms Episode: Nathan and Dave talk with Accurate Group BPO Guest: N/A Summary: Dave and Nathan discuss the critical importance of using BPO services and physical property inspections when investing in real estate notes, especially for out-of-area investments where accurate property condition assessment is essential for risk management.

Main Topics: Importance of physical property inspection in note investing, BPO (Broker Price Opinion) services and their value, Due diligence differences between first and second mortgage notes, Remote investing and out-of-area property evaluation, Property condition assessment and risk mitigation, Disposition strategies for non-performing notes Key Takeaways: Physical due diligence is essential when investing in notes outside your local area, as online maps and databases may be outdated or inaccurate | First mortgage investors prioritize property condition due to potential foreclosure, while second mortgage investors focus more on borrower quality | BPO services provide critical on-the-ground intelligence including occupancy status, hidden structural damage, and local market conditions | Property values can change significantly between online map updates, making professional inspections cost-effective insurance | Remote investors should never rely solely on Google Maps or Bing Maps for property assessment before purchasing notes Keywords: note investing, BPO, due diligence, property inspection, first mortgage, second mortgage, remote investing, foreclosure, disposition don't kind of do any of these back end stuff right you know i'm spending money on bpos not spending my on the only report you're really spending money after they accept that offer right right they accept the offer now you're diving due diligence your collateral file your bpo your own e those kind of things are what comes into play you're re viewing the collateral file yeah um are there different types of bpo external is there a different different kind of things you know i've only ordered the one so was there different kinds of o bpos done externally i mean we do a couple of different kinds of bpos so we could do um just a normal exterior vpo with some financial reviews we talked about um one of the things that we like to do here i don't know how wide spread it is across different providers but we also do desktops here as well so we do desktop dpos and desktop evaluations sometimes we did a good example was yesterday bank they needed something within 24 hours they had a an inspection done full-blown inspection like you know full property inspection they provided us that and we completed a desktop in-house so we can do that we can also that was a desktop evaluation we also do um desktop bpos in the same kind of scenario where if an inspection is provided to us or um we've got a situation where we're just going to make an assumption whatever we can find online and they just want to desktop cheaper alternatives in something where we just need to get something quickly or they're just looking specifically for the data within the bpo and not necessarily inspection component so those are options as well if i apologize i caught your computer bug yeah i know it's going around sorry that's all good so the one that we left off with was what's your pricing for the eno we call hey fellow no investor are you looking to learn the basics of note investing so you can get started however you don't want to spend a few hundreds or thousands of dollars and hours online on some training program have you thought about attending a notes conference however you don't want to spend the money or the time away from your family well we have a tremendous beginners video series of 20 different topics with each video being less than 15 minutes this means each video is less fluff and direct to the content visit www.jkpholdings.com beginner dash series to learn more again www beginner dash series [Music] what's up everyone dave what's up from jkp holdings alongside me nathan turner how are you doing i'm doing really well it's good it's good it was one of those weeks i'm um i'm looking forward to the weekend but i think we've had a really good week so i'm excited to know what comes to store next week we have some things prepping up that we're really excited about um in our weekly facebook uh our mastermind group that we run weekly is uh pretty interesting because we're doing a lot of stuff that um is out of the orders that's really really cool um and we're building up to the big reveal for that for our internal thing um for assets we've seen a little bit of low but we've actually seen different assets from like lease options and some of that coming from recently some commercial opportunities that we're diving into some actually in pa some in new jersey some in texas so that's kind of coming up a little bit which is pretty interesting so i'm kind of curious to see what that looks like i'll have to get with you on those lease options and stuff i we're not looking at the same tape so i'll yeah also if you're interested i was just telling you offline here i got these california loans interesting they're interesting so uh we'll talk later yeah if gabe's out there man listening will be uh talking to you soon i'm sure um so with note investing one of the big things that people have troubles with is knowing the property right that's one of our key things in our first space is knowing who's involved but also the paper with the property for the note space seconds care more about the borrower than than we do in the first place we're going to focus on that property making sure that property is something that we know that we have taken back what's it what's the best idea of value now we know that sometimes we do some rehab concerns but unlike anything else we can't get into the property and see it and for people who are investing outside their boundaries driving by property property that is not possible what do they do yeah and that and that's a really good point and that's one of the big biggest differences with the the due diligence when you're talking about the difference between the where'd dave go we lost him [Laughter] we got this yeah the the due diligence between the uh the first and the second is on that on the first you you're very much concerned with the property because there's a good chance you're taking that property back so you want to know as much as you can about the property whereas the second you're spending a lot more time on the borrower where for myself as a as a first buyer i hardly give the borrower a second look like other than if they're living or not that's my main concern uh really good point nathan like these properties are not in your backyard right so i have one investor that he actually was lucky enough to be able to only buy properties on his truck route but if you're buying a tape in indiana somewhere you know you can just go out there and drive by to kind of see like hey do these kind of seem like they're upstanding people is the grass cut you know is the roof caved in is there even a property still there so i mean we've seen it all so you bring up a really good point that need for the actual physical due diligence portion of it somebody's got to actually look at the property and that's and that comes from even first-hand experience when i first got started i did drive the mall way back 2008 i rented a car and i drove around ohio and michigan and indiana which was actually a really good exercise because i got to know those areas quite well but quite literally i would go buy we had an address and i'd go by and it was just an empty field and so we didn't have what we thought we had so somebody whether it's me or somebody else somebody has to go and lay eyes on that property and just see what's there is there is there a tree through the roof i've had it where the front of the building looks fine and around the side the whole side of the the house is caved in whoa sorry about that guys i'm not sure what happened there was something completely blank for like two minutes like i'm gonna just reconnect here and see what happens that works you're back all right i'm just talking about some of the some of the things we've seen where um sometimes that property is not what she thought it was it's certainly not the same oh my god no naps so we're talking offline before we connect with everybody here how weird it is where i was going to property 2013 2014 and just so happened i you know i won look at the back of the house so i went on google maps and i was just taking a peek before i dove in too much and the property's missing and this is whoa i must went too far yeah the corner lot gone yeah and i if i didn't take a look at the backyard i wouldn't have seen it there's people in the front steps the mailbox there like this doesn't make sense to me what happened right it was gone so bpo situations we get into is is somewhat helpful to know where that property is in condition but we're gonna dive into more even more reasons why bpo is definitely helpful to know not even if the property is there but more about it how the local boots on the ground especially if you're going outside your boundaries yeah at the very very least you need somebody to lay eyes on it at the very least yeah after that then there's there's all the other uh all the other stuff that comes along with that bpo and that's why we've got these guys here to help us uh that's a big thing right if you're buying it performing or non-performing you may have to go through disposition and if some place is a total just disaster hey maybe it's better to do everything you can to get a payoff by the buyer then try and go and you know see what it's like taken to auction or anything like that right now property values are insane so it's worth getting that bpo to kind of see what your potential upside is yeah bare minimum i probably nine times out of ten i would rather not take back the property just because it's less to deal with and we've talked about that before about how much easier a note is to deal with than it is than a property however like you say especially now with property values going up that prospect of getting the property back maybe isn't so bad uh and perhaps even more desirable and so that's it's at least a consideration something to to kind of look out for yeah so it's weird you know bpo is something that people sometimes hate to do because they're like well you know i might take the chance the small investment or what's the worst situation going to be involved and the worst can be really bad thousands but the best thing about it is most people don't realize from google maps and bing maps is they're not up to date yeah we've been situations where that property has tremendous upside in the last year since google maps updated and you don't know and you don't know what the situation is we've had times where the the agent goes out and they just happen to come across a situation that they just luckily got to where they saw something and told us right hey listen yeah we saw we couldn't go close to there's some people living in the house oh it's occupied right this is good information yeah i saw a ramp built for the handicap whoa there's medical situation going on here that we may not know little things so hey or you could find a brand new boat in the driveway and somebody's not making payments so we've seen those too yeah absolutely so let me let's back up here and let brandon and stacy what times what are the typical times that people buy bpos what are typical investments they use bpos for i take that brandon sure i mean really anytime somebody wants to get a bpo is generally a when there's maybe more than just a little bit of risk involved uh when they need to know a little bit more about the asset um we see them in in all sorts of fix and flip situations and really anything i mean we see a bpo being ordered um anytime anybody just wants to know a little bit more information about the asset or a little bit more about the environment in which it's in the neighborhood uh different comparable selections of data different things like that so we see them all the time in all sorts of different components of the process not only in the investment space uh dave but we also assume in the servicing space too so as you've got properties that are going into default really the servicer is going to understand okay we need to do a modification really what's worth it here what do we need to go about for our process so they'll get ordered way up in the line after property first starts going delinquent just to see okay what's the situation what is our plan now with the borrower so it's not only just guys that are investing in a few notes you know we've got huge um also capital market investors that are using them for their portfolios as well so maybe they're looking to do a trade get something off their books they'll do them along with avms you know before even taking that next step that action so let me just jump real quick let's define what bpo stands for and is it always done by the same person so brandon what does bpo stand for those are not familiar with it absolutely it's a broker price opinion and so uh typically what occurs or generally what occurs is that it is a we contact a real estate agent in that local market they go and take photos of the property depending on which company you're dealing with you know it may vary in the requirements for instance we asked to provide a front photo both sides uh both views of the street what the subject faces we have some very detailed photos if it's an interior we want two photos of every room from a different angle one point slightly up one point slightly down from opposite corners of the room so we can get a good general idea of what's going on in that property um and then they're going to look for three sales comparables and three active list comparables they're going to make some assumptions based on what kind of property it is or what what kind of inspection it is right if it's an exterior we've got to make some assumptions we state those assumptions in ours and then they come to a price conclusion based on their expertise and their experience so um generally that's what's uh required uh for bpo and is it done by brokers all the time it can be done by agents generally done by real estate agents i would say probably anywhere between 25 and 35 percent of them are actual brokers that do them generally they're just working with a brokerage and it's mostly most of our panel is just a real estate agent so we need to back up just for a second we never introduced you guys brandon uh from acura group who wants to introduce the company so yeah let's back up yeah my disconnect so stacy can you share a little about who acker group is and absolutely how did you get into space and what was the background of this yep so i started with akra group about a year ago we are a nationwide amc that does title evaluation work all across nationwide so we had no footprint in the note investment space whatsoever so we are the largest provider of title and valuation in home equity so we work with like bank of america wells fargo chase those kind of guys i actually have friends who i've worked with at prior companies that i said hey do you guys ever use like title reports bpos and kind of got my hands slapped it was like what do you think we do so um i got a crash course in note investing i got some links and books that i purchased um also sent to me and kind of developed this space for accurate group that really is coming in as being a better partner and a better solution than trying to go into different markets to try and find what you need maybe getting something all the time but you're not happy with it but really there's nowhere else to go so trying just to come in and say hey we've got this 20 years expertise we are actually nationwide you know not just a few big cities across the us you know we'll be here for you if you have questions on something if you know you're getting a report that you're like this doesn't make sense you can actually ask us those questions and all of our team is based here in the us that we actually you know brandon will go through his qc process but we really double check everything before it gets sent to you so it's nice that we've been able to come and grow in this space just by doing what we do every day and really being able to offer you guys solutions and the accurate no point intended but point intended uh to get you the information that you need for your investment decisions awesome pretty good all right so back to bpos then well brandon how did you get in the space what did you come from what was your background well i uh i got out of uh out of college i came to um just was applying for different jobs and ended up at a company called the mortgage logic and uh worked there for 12 years and later started my own bpo company after that there was a couple of acquisitions we went to assurance and then it became part of zone and i uh went off and started my own bpo company uh here and we've been doing this for uh three years and working very closely with acura group so um yeah it's been it's been a fun fun ride 15 years in the evaluation space i've been an appraiser uh oh wow that fun stuff so yeah that's awesome very cool good good good experience so i don't know if you add this on to your your comment about pictures and i how do we know that that's the property that we asked for absolutely so a couple different ways uh we can do uh that validation so obviously uh with the technology that's come along with uh with geo um metrics and all that kind of stuff as it pertains to looking at maps that that are there and then leveraging the data that's actually in the photos we validate it that way technologically and then through the other means right of just making sure we look if we would ask for an address verification photo generally if it's not there then we do our due diligence by either going back looking at google maps looking at a previous listing if there has been one really any means that we have the capability to do to make sure that that's the same problem cool okay good so you know when we order bpo how long does it typically take to get one back obviously depending on the area but what's the typical time frame that we can expect them to return yeah absolutely i was actually just pulling timelines last night for uh for some of our team over there um so for our average exterior time which is includes nationwide it includes pearl wyoming and includes uh fort worth texas it's uh uh in business days about 2.9 days and then our calendar base is about 3.67 for an exterior looking at two to three days um and then for an interior really depends on the access if it's on a lock box it's unoccupied those generally don't take more than three to four days if it's a situation where it's an elongated situation that could take a week or we gotta work it out with a borrower all that kind of stuff so here's a little bit hairier but our average time is less than five days on an interior assuming we don't have any of those challenges so nathan what have you done so good stacy i was gonna say brandon we started talking about the qc process that you guys do for the photo uh verification of the location what other qc steps do you guys take prior to delivering those final bpos yeah absolutely there's a there's there's always a question when you're when you're dealing with um opinions price opinions which it's in the name right so there's always a question of accuracy and credibility and all those kinds of things so when we look at q when we look at qc as a general term i can't speak for what other companies do i can only speak what we do specifically uh but generally every company is going to have some kind of gc process but to explain kind of how we do it we we've got a lot of focus on who is performing the report right quality i was always going to start with who's actually doing it so we've got a lot of focus on who is completing that report having a history and making sure that that's an experienced individual that has some knowledge about that specific market and then going from there once we feel like we've got the right person to do it in addition to all the normal technological rules engines and things like that just normal questions throughout the report uh we have valuations expertise in house so everybody that has been working here has been um doing this for over seven eight years some of these folks have been working for me for 12 years they've been a long-standing team these are people with a lot of experience we put people through evaluation courses not just from a bpo standpoint but mainly through appraisal methodology understanding the importance of the various appraisal principles and then putting them through the racket of really understanding what they're looking at so some people choose to offshore all that we keep it in-house um we do everything in here and someone uh every bpa that comes through someone is looking at it um not just doing data validation which we do through technology as well we pull in the local mls data through various data partners um and so that gets validated when the comp is selected so if they say it's two thousand square feet we wanna make sure that public data records state that it is also that um any variances are looked into and checked and then validated and is communicated back to the end user to make sure that if there is some kind of variance okay there was a an added on section so the tax record does indeed say it's 1700 square feet but it's actually you know 2200 square feet it was a legal permissible uh use of that area here's that documentation that we found want to make sure we send that on in addition to that um they go through and we do a nice validation of the the comparable selection itself to make sure so when we're especially on exteriors of certain assumptions that have to be made right what what am i saying from the outside it's going to give me a little bit of an indicator on what's going on inside the house so um we make sure that the comparable selection aligns with those assumptions if we feel like it's a pretty good asset it's it's currently occupied looks like you know based on the exterior maybe there's some general updates on the interior as well we're going to align that with these comparables sometimes we unfortunately have the situation where we see well i think this property is upgraded they've got a bunch of stuff going on on the outside looks good uh but i selected all of these inferior comparables and i aligned the value so we're really looking for those kind of things not just with the tangible locational differences and the things that you can see in the grid but also looking at the pictures of the comparables to make sure we're comparing atmospheres because that's really where the variable pricing is that's what we do on every single one we find issues we send it back um we're kind of stingy uh we've got a fail rate of uh you know we ask a lot of questions we've got a pretty high fail rate around 46 to 57 depending on what it is certainly higher on interiors when there's a little bit more information available um so there's a lot of dialogue between us and the agent we learn a lot about them they learn a lot about us and what we're looking for so we're pretty uh strengthening so what are your typical limitations seem like you guys cover a lot what are things that you guys struggle with obviously time is always a struggle um you know you try doing your best you can do you have any other limitations at all yeah i mean certainly um it's pretty some limitations there's certain things that we'd certainly not want to compromise the safety and security of the agents of doing the inspection sometimes we get some kind of we would like to customize as much as we can and and make sure that we can accommodate any requests certainly for different types of information so in that way your customers could or your your listeners uh can certainly um ask for certain kinds of things but we're not going to put somebody in a position where they're going to go up and looking through a window or go on somebody's private property and put themselves at risk but certainly limitations exist we're not dealing with general contractors so um you know we've got different tools that help us identify repairs and things like that but generally you're not going to trust your real estate agent to understand uh all the different nuances and of different construction protocols associated with replacing cabinets right and give you a general idea but uh i certainly wouldn't look at a bpo and say wow okay well he said it's only gonna cost me 10 grand to fix this house probably not where you want to start we do a lot of different things to try to combat that we've got relationships with exact square and things like that that we can have as add-ons and go through um but um that's generally where we we say okay we've got an expert in the marketplace and buyer nuance and things like that and the emotional things that go into buying a house is where we find real estate agents are really really good they understand how to find you know properties that are going to compete with your asset and give you a pretty good value conclusion they're not going to necessarily be the best at letting you know um how much it's going to take to to fix a problem yeah is there a foundation issue in the backyard that you can't get to yeah and that's and that's one of the inherent limitations with when we're doing it as a note uh it's an exterior so that the interior is a mystery and like you say oftentimes it reflects the outside it reflects the inside but not always and you know there's through nobody's fault i mean that you know there's that's just one of the risks that's one of the inherent risks of node investing is if you take that property back you don't necessarily know what you're getting into when you get inside the front door or back door window whatever the case might be there and with these bpos they often sometimes share the agent's information is there any kind of no no against us reach out the agent if we take the property back if we buy the property a note and we won't need some local assistance is are we allowed to speak to that agent directly yeah i mean in the process there's there's a little bit of a delineation between what we're talking about we always include the agent's information on there so i think absolutely generally a lot of agents do these for the hope that maybe down the line um they can get involved in in that asset somehow as it pertains to actually selling or helping them with that property so in that way absolutely i think if we're talking about trying to get a you know a lot of the point of the dpos to get an independent third party unbiased to get their opinion of the asset so as it pertains specifically to the bpo we typically encourage if you have something that's going on with the bpo or you got a question about it we'll brought that back through us instead of you know reaching out to the agent and potentially creating uh some kind of yeah issue here and if we have a problem with bpo we can say we don't agree with it we want and we would argue that bpo would say whoa why are the comms three miles away we're in chicago it makes no sense absolutely and we hopefully be catching that on the front end but certainly there are situations where there's a decision to be made and the end user doesn't agree with the decision that was made and so certainly um you know we always welcome that feedback come back to us say hey i don't necessarily feel this way or or what about this one i found this one it's the same thing that we do to the agents and sometimes those can get crossed or maybe there's additional information that that you guys are aware of yeah we're not and so we assumed one thing and you know a little bit more about it hey we will go back certainly happy to go back to the agent uh get it changed if we feel like there's a serious issue with the competency of the person who did it that helps us a lot get those people out of the system as well as and we would just get replacement in that situation like parameters that you'd like the bpo agents to follow to say for instance i have one client who is like don't don't give me any reo properties as comps you know if you have those types of you know rules that you want to follow make that be aware that's definitely something that we can cater you know we can't go and knock on the front door to see if someone's there but we can say based on what we see from the outside what is that perceived occupancy at the property so you know there are things that we can do for you that kind of help make it out a little bit easier for you i'll i'll often follow up with uh the whoever it was that did the the bpo and just more for a sense of uh the neighborhood and and what's going on in that particular neighborhood that it might it's you know there may be everything right with that but that's fine and that's great and i'm really happy for that and then i'll follow up and say so you know is there anything nearby i had an example where one was was right close to a it was a football or baseball stadium or something like that which on you know it could be a plus or a minus and and it's just good to know like i don't know that kind of stuff i don't know how you know the proximity to this place or this store or that school even um you know they can are there high power lines behind the property you know what's on the corner yeah yeah and there is tell me all kinds of things and just yeah is it close with school close to a church those kind of things is there a major highway nearby because that's a you know over the railroad tracks kind of the situation a lot of times and oftentimes you can see you know some of those barriers uh like a highway is not too hard to see on a map uh however um i've been in cities where if you cross this street you know i on this side of the street it's this and you know it's not a major thoroughfare or anything like that it's just the locals know that on this side of the street it's like this and on that side of the street it's like that and and how else do you put that on the report you know you can't really so that follow-up is is pretty cool and that's a key thing you're right because there's sometimes for that street maybe a deviation from 1950 that just certain people live in one size or in that deviation you can't see anywhere else and that local person is that local key to everything yeah um so if i go ahead and i want to buy bpo from you guys what is the typical process walk through either new investor or experienced investor are they emailing are they sending a thing online are you logging in tell them about the process yeah so it's really easy for us we have a standardized note investor agreement so you actually not only get will you get bpos available to you but other types of evaluation and also title so read the gate you basically have access to go into your client portal where not only do we keep a document vault of everything that you're ordering but we also email it to you so i have some guys they never log into it don't even know what their password is they email me everything i send it out we have other guys that they love going in there they actually use it as their own file reporting system so you can upload documentation based on the property level we also have it set up where each property has its own kind of title page to it so if you want to order a bpo then say hey you know what i am going to go down through this path and then want to order title on it you can do that as well so we really make it easy it's as simple as putting the address we don't even need the borrower name put an unknown and any special instructions and then we shoot it right off and we treat you guys as if you're the biggest servicer on the planet so we don't have any delineation based on you know who the client is it just goes right up through our network what kind of special requests can we make like are what are some common ones that might come from note investors like i said occupancy so hey can you tell me if you think anyone's there um you know i get sometimes like hey is the electricity on can you see something like that so um we also get notices and postings that can make a big difference so you know if you could get a zoomed in photo on the front to kind of see has it been condemned what's going on there um so just little things like that did you get any other specific requests from any of the larger clients as well uh we certainly had situations where um if it's something that's easy enough we can we can always add our forms are generally customizable to a certain extent um so we're always happy to answer any specific questions and sometimes with some of these smaller deals there might be some additional information that can be provided and that's always welcome too so yeah there's special requests but there's also the capability to say hey i know a little bit about this asset um here it is and you know leverage that uh when you're driving by and seeing hey you know to stay somebody living there how'd you verify that was there a bunch of mail piled up or um you know the lawn mowed all that different kind of stuff uh give me a little bit more color around that specifically because i'm very sensitive to that particular you know items so those are generally the kinds of things that that we get or like description neighborhood description of the neighborhood like you were mentioning nathan like hey just give me a quick overview like what you know what's the neighborhood kind of like so within what they're allowed to do legally as realtors they'll they'll do the best that they can for you right right right that asks how can we ask those types of questions and give a little more information without um breaking down and crossing any lines so you mentioned you've run o and e reports and title reports like that you know these bpos these exteriors ones we really look for right we don't do the interiors until we take ownership of it typically what are the typical pricing that a bpo may cost us and o costs us we got the time frame two three days which is pretty good right you know only i presume would be the same kind of time frame depending on where it's located exactly so it's a hundred dollars for an exterior bpo 135 for interior and for our property reports they based on whether it's current owner if you're doing juniors or it's a two owner or full owner search like you said they do vary based on the state that you're looking at but our turn time for those are two days for two owners they can sometimes go a little bit longer i saw in alabama that the abstractor had to go all the way down to the county and go through the giant books to try and find a death certificate and transfer but they're they're pretty quick we actually have our search team is based out of south carolina and we've got thousands of them that do searches nationwide for full title commitments so they're not saying oh this is just for an eno report it would be doing the same search as if you were getting a full title policy so we'll write out chains of assignments write any notes if there's anything weird gaps that we see we check for bankruptcies and also foreclosures so if you do have to service it and somebody's in bankruptcy you don't get a surprise there uh just things that you know are usually included in our reports so we physically search ones that we have to and you're not just getting oh there we go what's going on oh technology today that's interesting too because the only report is something we really care about and most of the time we don't get the the foreclosure information well sorry the bankruptcy information tied into it that was a really cool key point that um i have not seen before that's pretty cool i didn't hear the pricing yet but i'm sure we'll get that later so one thing i wanted to add in there for so just for the information of the newer investor um when we're talking about timelines so you've put in your indicative bid and then uh you've got a funding date and in between that time is when you do your bpo and your your title search now uh first of all plan that time in so don't say you know all right indicative of bids in today we're going to close tomorrow uh that's not going to work because it takes time to get these reports back uh yes a week 10 days that's fine if for some reason it's going longer than that just say that to the seller just let them know what's going on let them know you know what i'm waiting on this bpo uh it was a place where maybe a more real remote location and we had trouble hiring somebody to do the report in the first place something you know whatever the the case is don't make stuff up but uh i've been times where bpo took a week to get back to what it was it was very rural and they had a hard time getting eaten and they had drive the agent i drive 30 miles and it was a thursday you know like i couldn't get till tuesday yeah um those things happen yeah so but just let them know what's going on and yeah so just ten times out of ten that's fine refreshing the fact that when you make that ticket offer you it on a report eno report uh which definitely that definitely tells you the occupancy and typically the the eno report tells us from the from the person in the time they buy that property till now right the sec 2 party is typically what we don't get into the the 30 years and some of that we want to know because typically when an asset has a title policy on it that protects the back end typically and then ours is just from the one the day they bought it till now what liens have been attached to what's happened to it and things like that so what is your cost for an only report to be right yeah so they do they do vary by state so what i can do for you is i can send you our pdf of pricing if you want to share it with your network they're more than welcome to it's completely transparent so awesome so we do you see all of them prior to them getting sent over and if you have any questions about what you see we encourage every single one of our investors to give us a ring we give you the contact information for our entire search department so you always have somebody that you can physically call that's great because a lot of new investors get scared when they say you know the report they're saying well i don't know what to look at let's see firstly in second liens and i see the list of people what happened here so guys be sure to give a call reach out and say listen i don't understand this right or i'm curious more about this part of it if you question something too i mean we have some states where it's not required to you know actually record the mortgage or if you're dealing with some companies that they bought a whole bunch of assets was it carver something like that they were terrible when they were disposing all of their assets so we see everything that you can possibly think of you know if anything ever seems weird please reach out you know don't feel like you're alone with anything looking in a vacuum i think the biggest struggle we have is when there's water lean like which is extremely difficult because sometimes it's not recorded maybe it's with the city and things like that so oh we had a school tax situation so one of our new clients they had pulled a title report from a different company and found out that that property actually fell on two counties for the school tax and they ended up not knowing they had like a twelve thousand dollar backpack situation so yeah so it really does we actually have all of our note investors i mark them i haven't flagged all as npls so we do a certain extra level of check on taxes for you guys um especially with that share of tax sale situation where you could potentially fall into so yeah yeah i i definitely know what you guys are going for wow that's awesome between those two reports that's like absolute must do and i've been tempted every once in a while to skip and i've shared stories in the past ones where i did skip and it didn't turn out well you you absolutely have to get both of those things done uh even if you think you know what the property looks like no get the bpo get somebody out there unless you looked at it yesterday like get somebody out there that can actually look exactly it's just the risks nathan right so you'll count 100 for bpo title reports you know they're what 85 to maybe 165 based on like the crazy states you know but you're getting full tax information and things like you know if maybe you're only paying five six thousand for you know one of these properties in a bigger pool but it's gonna cost you you know 15 grand down the line like no way yeah so it's just not worth it and those who haven't seen the reports before typically they have a collateral attachment sort so you're going to see other reports on here so you can see additional stuff like the foreclosure stuff so guys if you're buying an acid one e is always a must right yeah and the bpo knowing that value because anything could happen yesterday and that's the problem a fire a house burned down whatever the reason is all those kind is going to happen and have that local agent is a local handful for you right so if you need to know something or if you reach out to them later listen i need to do another drive by word about the foreclosure situation can you just drive by the property sure in that connection you have is something valuable when you take the property back and you need someone to help you with the disposal of property they're there they're that local connection yeah yeah and and having the title and then having that agent in place um is so so so key and and i i gosh the majority of time i don't have any wouldn't even try to put a number on it but the majority of the time the person who did the bpo is my agent in that place in that city in that town or whatever it is and it's just you it's an absolute shoe and then from the from the agent they usually have somebody that can do the clean out they usually know a locksmith that they use and trust um they'll they'll have all kinds of other resources that that you're gonna need we talked a little bit beforehand about different code violations you know if you end up having a property that's in dismal condition you know you could be getting you know dave you're in new jersey we had a situation with a servicer they got a property it was like 200 000 in this historic district in new jersey and had to go and call and you know basically just say hey we've got the property now we're taking it over here's when someone's gonna be out there and really got those down but it's you know you never know what you face if you don't physically go to the property you just have no idea yeah yeah it's so so key always always always you know and as bpos change and they adjust you know some of the key things that people miss on the fact is the roof conditions like that you know you can definitely see sometimes with the roof uh brandon are you guys exploring the whole idea of doing drone work at all is that something it's coming out about to see the roof condition because you can't see it from street level um it's one of those things that we're not finding it all that uncommon for many of our agents to have and so it might [Laughter] uh just for those situations um where we can um we're starting to to do a little bit more work with with some people in the fix and flip space that are looking for those kinds of things um so absolutely i think we're on the cusp of probably turning that corner and getting uh a network um we've actually started you know two of our enhancements that we've got kind of focused in systematically over the next few months is being able to identify which of our agents you know we we're used to saying okay do they have a license and do that you know and all that kind of stuff now or do they have a drone part of the selection criteria because we've got very specific uh needs as we try to you know work our way is how we can help people in that space that's a really huge thing how do we bridge that gap so as i spoke earlier you're not necessarily going to trust a real estate agent to give you an exact price that a contractor would on it but as much information that we can provide to help in those scenarios how can we make sure that we can provide that so that's absolutely on our radar and it's a focus room that's awesome so guys as you heard here bpo zoneys they're they're actually catering to the new investors versus bpo companies they're really big who just cookie cutter stuff together which is frustrating because a lot of times a they have no clue what we actually want or need they can't actually really focus what they're look what you're looking for it's key here right knowing a local condition asking a particular question hey listen is there any kind of situation here that i should be aware of or concerns you know locally and they each you can answer that question right and those kind of things um my last question i'll let nathan get his last question too is is there a situation you've got come across where things weren't as google maps shows to be or you know investors like wow this just surprised me anything on a bp over surprised you guys or jump out there just was shocking oh yeah we've got them where we were talking about before you go there's supposed to be a house there google maps from five years ago says that there's a house there you go and it's a concrete slab and we've actually had it where the investor came and he was like you you went to the wrong property you guys went to the wrong property you made the mistake go back and we spent an extra like two days doing the research sent you know guy back out everything else no house there got the apology said thanks so much for double checking for me but uh it happens i mean you just and my one investor he had two fires in the same month so you could have a front of house look good and then if you're going up the street looking at the side like nathan said before it's just not there so um it is almost like the wild west right so it they are your only line of defense in that actual local neighborhood brandon you've done it long enough what's the weirdest thing you've seen my uh there's i've got two favorites probably one of my top was was we went and we were expecting to see a mobile home a manufactured home there and what we saw was this gigantic poorly constructed monstrosity and as we kind of investigated a little bit more what we found is they uh left the mobile home intact in the middle and started building around it and made it you know whatever a it was a single wide originally and and turned it into this 3 000 square foot structure the bathrooms because they didn't like they didn't leave any plumbing so the bathrooms were still where the bathrooms were and you know it was this very fun thing i think the other thing i saw was a pool conversion we had a pool conversion where they roofed it and somebody lived it was it was an ancillary unit it was advertised as a two unit property oh my goodness california and they had actually just put something over the pool and somebody was living down there and they had a vent that ran down to get the air circulation it was but it was like full on it like started at three feet goes down to like eight feet the bed was over here in the corner it was it was rental income we've seen some crazy things so get get the inspection done definitely find out what you're what you're buying ethan maybe that's on your uh your list of those notes coming through maybe it might be we'll see no it's it's a hundred bucks and yeah it's it's so worth it to get you know that hundred dollars have somebody out there and just have a look and just know for sure especially especially i mean if you're going to go drive by yourself i guess that's one thing personally i would still rather have a realtor go by and and let me know what they know about the neighborhood because even if you know it's the town next door it could be a totally different neighborhood and you may not know what you think you know and the realtors do yeah especially cleveland like where i'm from it is street by street right so you've got multiple different zip codes with that cleveland name and it just really all depends yeah absolutely so nathan let you uh ask the final question yeah what do you guys see coming down the pipe have you seen any trends um coming out of covid anything that's been different that indicates any future performance we'll leave it open like that so i was actually talking about my girlfriends and servicing so she works at a very big servicing house and she was saying that the reason why you're just not really seeing any defaults right now is because the regulators are working to making sure that there is a stream and not a waterfall of them so the kind of view is that they are all still coming but they're going to be coming more on a scattered approach so i know nobody really kind of wants to deal with that having their legacy with another like 2008 crisis but she said that they're still kind of just ramping up and waiting for it so interesting interesting brandon what are your the property said yeah what do you think property-wise i think generally i think there's been a long line of situations being pre-coped we felt when we started everything that we were probably on the cusp of a little bit more of a default wave uh covet i think kind of temporarily bailed out some of that uh situation i think there were a lot of people that found themselves delinquent and then found themselves with relief right um so i i think that there is certainly things it's hard to say this was a very unique situation because it is very hard to say but based on what we're seeing i mean a buddy of mine just bought a house he missed out on two houses and he was 30 40 000 above the list price on his offer uh with conventional financing uh in a big down payment he had to go as far as 50 i think he ended at 52 000 above the list price in order to get looked at he did get that house one of our employees neighbors uh they uh they ended up selling their house for 70 000 above list and there was 40 offers um you know on that property in two days so i think there's definitely a supply problem uh all across the country certainly in north texas and yeah i i think that will help stabilize out some prices um as we go and i think there's gonna be a lot of opportunity um but i think it still we still might have a bunch of craziness as that supply starts to and people have money to spend so yeah it's definitely a weird comment right now because we're seeing the same thing in new jersey prices are still crazy over list price is normal uh one of my good friends runs a very large reo division uh for a big fund and he's like i can't if a property gets bid everything's as is and if you're not above list price i'm not even looking at it it's just wild and he's imagining you know 800 plus reos and he says dave it's unbelievable what we're dealing with might be actually they're getting like 30 or 40 a month still and he's like listen i'm dwindling down quicker this is great i'm selling properties faster as is no questions yet no contingencies and it's amazing right now for him um we're seeing assuming our proper values right in our side me nathan's talked a lot of people there's not many defaults going on our side either we're not seeing the default levels like we all expected to um but at this point our values are going up at the same time which is it's like florida for the whole country right now for us so that's interesting so well guys i think time hotel time hotel yes stacey oh i was just going to say you know before cobia and everything it looked like the price of performing notes were going up are those skyrocketed right now like is it better off you know to take a risk for a non-performing and kind of look to see what you can get from a you know why did they kind of go you know dirty for a little bit or is it safer just still to pay a little bit more and go that performing route than what you feel that first knives that's a that's a tough question um obviously part of it depends on your risk level uh and your your tolerance uh for myself i've always done npls and so because i like the discount more than anything else and i don't mind putting in the work um if you're looking for something just in retirement that you don't have to do anything with and touch it's probably worth it to spend a little bit more and just get a performer and let it ride so it's it's i think it's still in the realm of personal preference whatever you're more comfortable with i would say performers are really high unless you're an individual investor just trying to get rid of their portfolio i have three assets just trying to sell them off you can usually sneak them away but yeah performing notes are expected to get 90 95 percent of you know of upb even with a three or four percent coupon it's really wild even non-performers are high priced now where you know when we got big we got started we're buying at 30 cents you know it and there was no way to get above 65.

we're seeing it sometimes not before i'm selling it 70 75 and everything's up and the reason being is for my understanding is we kind of tailor along reos and reos are up right they're above what the really the value of the property is so we're just tailing behind it we're always a percentage below it and because it's over 100 our mpls are getting priced high like you know buying at 65.70 is ridiculous five years ago but now we're seeing a lot of that people winning those offers those kind of things we're also seeing people getting in the space making offers that are just not so smart sometimes and they're also helping drive that price up yeah so yeah pricing is just what it is across the board with real estate um it's just wacky rocky so and that you know subject to change who knows yeah we're open so right yeah i always like to ask guys what they're investing in when they come on board too so it's fascinating to see kind of the breath that you know is within your industry too so yeah yeah so 100 ways to skin this cat there there are so many ways to do it so many angles to play here yeah well guys i thank you so much for your time i appreciate your wealth of knowledge sharing information but also what you guys are doing for the node space and really focusing on it so that you can help out even the advanced investors as well as the beginners and holding them a tailor to it to make it more comfortable getting an asset outside your backyard is probably the most difficult thing that people convert over from real estate to nodes to do and having that trust and insurance that that property is secured by tools and resources that you guys can provide makes it a lot easier for the investor to get into it so i thank you for things where we know it's hard to get fifteen thousand dollars to buy your first note i personally don't have it i gotta start off jv but um it's one of those where you know we we can try and treat it like it's our own money so we do get it yeah definitely yes it's a hundred dollars but it's a hundred dollars right so we want to make sure you're getting value for that so yes we want to put as much as we can into it and make sure it's something that's valuable to you worth more than a hundred dollars this should be anything for you so we want to make sure that it's not just um you know just a piece of paper that i got the pictures and that was the only thing that was really worth it to me more than information that's awesome well guys have a great weekend thank you so much for joining us thank you thank you so much for having us next week we'll be on again guys nathan enjoy your weekend man yeah your dating goes well absolutely enjoy have a great time internal thing um for assets we've seen a little bit of low but we've actually seen different assets from like lease options and some of that coming from recently some commercial opportunities that we're diving into some actually in pa some in new jersey some in texas so that's kind of coming up a little bit which is pretty interesting so i'm kind of curious to see what that looks like i'll have to get with you on those lease options and stuff i we're not looking at the same tape so i'll yeah also if you're interested i was just telling you offline here i got these california loans interesting they're interesting so uh we'll talk later yeah if gabe's out there man listening will be uh talking to you soon i'm sure um so with note investing one of the big things that people have troubles with is knowing the property right that's one of our key things in our first space is knowing who's involved but also the paper with the property for the note space seconds care more about the borrower than than we do in the first place we're going to focus on that property making sure that property is something that we know that we have taken back what's it what's the best idea of value now we know that sometimes we do some rehab concerns but unlike anything else we can't get into the property and see it and for people who are investing outside their boundaries driving by property property that is not possible what do they do yeah and that and that's a really good point and that's one of the big biggest differences with the the due diligence when you're talking about the difference between the where'd dave go we lost him [Laughter] we got this yeah the the due diligence between the uh the first and the second is on that on the first you you're very much concerned with the property because there's a good chance you're taking that property back so you want to know as much as you can about the property whereas the second you're spending a lot more time on the borrower where for myself as a as a first buyer i hardly give the borrower a second look like other than if they're living or not that's my main concern uh really good point nathan like these properties are not in your backyard right so i have one investor that he actually was lucky enough to be able to only buy properties on his truck route but if you're buying a tape in indiana somewhere you know you can just go out there and drive by to kind of see like hey do these kind of seem like they're upstanding people is the grass cut you know is the roof caved in is there even a property still there so i mean we've seen it all so you bring up a really good point that need for the actual physical due diligence portion of it somebody's got to actually look at the property and that's and that comes from even first-hand experience when i first got started i did drive the mall way back 2008 i rented a car and i drove around ohio and michigan and indiana which was actually a really good exercise because i got to know those areas quite well but quite literally i would go buy we had an address and i'd go by and it was just an empty field and so we didn't have what we thought we had so somebody whether it's me or somebody else somebody has to go and lay eyes on that property and just see what's there is there is there a tree through the roof i've had it where the front of the building looks fine and around the side the whole side of the the house is caved in whoa sorry about that guys i'm not sure what happened there was something completely blank for like two minutes like i'm gonna just reconnect here and see what happens that works you're back all right i'm just talking about some of the some of the things we've seen where um sometimes that property is not what she thought it was it's certainly not the same oh my god no naps so we're talking offline before we connect with everybody here how weird it is where i was going to property 2013 2014 and just so happened i you know i won look at the back of the house so i went on google maps and i was just taking a peek before i dove in too much and the property's missing and this is whoa i must went too far yeah the corner lot gone yeah and i if i didn't take a look at the backyard i wouldn't have seen it there's people in the front steps the mailbox there like this doesn't make sense to me what happened right it was gone so bpo situations we get into is is somewhat helpful to know where that property is in condition but we're gonna dive into more even more reasons why bpo is definitely helpful to know not even if the property is there but more about it how the local boots on the ground especially if you're going outside your boundaries yeah at the very very least you need somebody to lay eyes on it at the very least yeah after that then there's there's all the other uh all the other stuff that comes along with that bpo and that's why we've got these guys here to help us uh that's a big thing right if you're buying it performing or non-performing you may have to go through disposition and if some place is a total just disaster hey maybe it's better to do everything you can to get a payoff by the buyer then try and go and you know see what it's like taken to auction or anything like that right now property values are insane so it's worth getting that bpo to kind of see what your potential upside is yeah bare minimum i probably nine times out of ten i would rather not take back the property just because it's less to deal with and we've talked about that before about how much easier a note is to deal with than it is than a property however like you say especially now with property values going up that prospect of getting the property back maybe isn't so bad uh and perhaps even more desirable and so that's it's at least a consideration something to to kind of look out for yeah so it's weird you know bpo is something that people sometimes hate to do because they're like well you know i might take the chance the small investment or what's the worst situation going to be involved and the worst can be really bad thousands but the best thing about it is most people don't realize from google maps and bing maps is they're not up to date yeah we've been situations where that property has tremendous upside in the last year since google maps updated and you don't know and you don't know what the situation is we've had times where the the agent goes out and they just happen to come across a situation that they just luckily got to where they saw something and told us right hey listen yeah we saw we couldn't go close to there's some people living in the house oh it's occupied right this is good information yeah i saw a ramp built for the handicap whoa there's medical situation going on here that we may not know little things so hey or you could find a brand new boat in the driveway and somebody's not making payments so we've seen those too yeah absolutely so let me let's back up here and let brandon and stacy what times what are the typical times that people buy bpos what are typical investments they use bpos for i take that brandon sure i mean really anytime somebody wants to get a bpo is generally a when there's maybe more than just a little bit of risk involved uh when they need to know a little bit more about the asset um we see them in in all sorts of fix and flip situations and really anything i mean we see a bpo being ordered um anytime anybody just wants to know a little bit more information about the asset or a little bit more about the environment in which it's in the neighborhood uh different comparable selections of data different things like that so we see them all the time in all sorts of different components of the process not only in the investment space uh dave but we also assume in the servicing space too so as you've got properties that are going into default really the servicer is going to understand okay we need to do a modification really what's worth it here what do we need to go about for our process so they'll get ordered way up in the line after property first starts going delinquent just to see okay what's the situation what is our plan now with the borrower so it's not only just guys that are investing in a few notes you know we've got huge um also capital market investors that are using them for their portfolios as well so maybe they're looking to do a trade get something off their books they'll do them along with avms you know before even taking that next step that action so let me just jump real quick let's define what bpo stands for and is it always done by the same person so brandon what does bpo stand for those are not familiar with it absolutely it's a broker price opinion and so uh typically what occurs or generally what occurs is that it is a we contact a real estate agent in that local market they go and take photos of the property depending on which company you're dealing with you know it may vary in the requirements for instance we asked to provide a front photo both sides uh both views of the street what the subject faces we have some very detailed photos if it's an interior we want two photos of every room from a different angle one point slightly up one point slightly down from opposite corners of the room so we can get a good general idea of what's going on in that property um and then they're going to look for three sales comparables and three active list comparables they're going to make some assumptions based on what kind of property it is or what what kind of inspection it is right if it's an exterior we've got to make some assumptions we state those assumptions in ours and then they come to a price conclusion based on their expertise and their experience so um generally that's what's uh required uh for bpo and is it done by brokers all the time it can be done by agents generally done by real estate agents i would say probably anywhere between 25 and 35 percent of them are actual brokers that do them generally they're just working with a brokerage and it's mostly most of our panel is just a real estate agent so we need to back up just for a second we never introduced you guys brandon uh from acura group who wants to introduce the company so yeah let's back up yeah my disconnect so stacy can you share a little about who acker group is and absolutely how did you get into space and what was the background of this yep so i started with akra group about a year ago we are a nationwide amc that does title evaluation work all across nationwide so we had no footprint in the note investment space whatsoever so we are the largest provider of title and valuation in home equity so we work with like bank of america wells fargo chase those kind of guys i actually have friends who i've worked with at prior companies that i said hey do you guys ever use like title reports bpos and kind of got my hands slapped it was like what do you think we do so um i got a crash course in note investing i got some links and books that i purchased um also sent to me and kind of developed this space for accurate group that really is coming in as being a better partner and a better solution than trying to go into different markets to try and find what you need maybe getting something all the time but you're not happy with it but really there's nowhere else to go so trying just to come in and say hey we've got this 20 years expertise we are actually nationwide you know not just a few big cities across the us you know we'll be here for you if you have questions on something if you know you're getting a report that you're like this doesn't make sense you can actually ask us those questions and all of our team is based here in the us that we actually you know brandon will go through his qc process but we really double check everything before it gets sent to you so it's nice that we've been able to come and grow in this space just by doing what we do every day and really being able to offer you guys solutions and the accurate no point intended but point intended uh to get you the information that you need for your investment decisions awesome pretty good all right so back to bpos then well brandon how did you get in the space what did you come from what was your background well i uh i got out of uh out of college i came to um just was applying for different jobs and ended up at a company called the mortgage logic and uh worked there for 12 years and later started my own bpo company after that there was a couple of acquisitions we went to assurance and then it became part of zone and i uh went off and started my own bpo company uh here and we've been doing this for uh three years and working very closely with acura group so um yeah it's been it's been a fun fun ride 15 years in the evaluation space i've been an appraiser uh oh wow that fun stuff so yeah that's awesome very cool good good good experience so i don't know if you add this on to your your comment about pictures and i how do we know that that's the property that we asked for absolutely so a couple different ways uh we can do uh that validation so obviously uh with the technology that's come along with uh with geo um metrics and all that kind of stuff as it pertains to looking at maps that that are there and then leveraging the data that's actually in the photos we validate it that way technologically and then through the other means right of just making sure we look if we would ask for an address verification photo generally if it's not there then we do our due diligence by either going back looking at google maps looking at a previous listing if there has been one really any means that we have the capability to do to make sure that that's the same problem cool okay good so you know when we order bpo how long does it typically take to get one back obviously depending on the area but what's the typical time frame that we can expect them to return yeah absolutely i was actually just pulling timelines last night for uh for some of our team over there um so for our average exterior time which is includes nationwide it includes pearl wyoming and includes uh fort worth texas it's uh uh in business days about 2.9 days and then our calendar base is about 3.67 for an exterior looking at two to three days um and then for an interior really depends on the access if it's on a lock box it's unoccupied those generally don't take more than three to four days if it's a situation where it's an elongated situation that could take a week or we gotta work it out with a borrower all that kind of stuff so here's a little bit hairier but our average time is less than five days on an interior assuming we don't have any of those challenges so nathan what have you done so good stacy i was gonna say brandon we started talking about the qc process that you guys do for the photo uh verification of the location what other qc steps do you guys take prior to delivering those final bpos yeah absolutely there's a there's there's always a question when you're when you're dealing with um opinions price opinions which it's in the name right so there's always a question of accuracy and credibility and all those kinds of things so when we look at q when we look at qc as a general term i can't speak for what other companies do i can only speak what we do specifically uh but generally every company is going to have some kind of gc process but to explain kind of how we do it we we've got a lot of focus on who is performing the report right quality i was always going to start with who's actually doing it so we've got a lot of focus on who is completing that report having a history and making sure that that's an experienced individual that has some knowledge about that specific market and then going from there once we feel like we've got the right person to do it in addition to all the normal technological rules engines and things like that just normal questions throughout the report uh we have valuations expertise in house so everybody that has been working here has been um doing this for over seven eight years some of these folks have been working for me for 12 years they've been a long-standing team these are people with a lot of experience we put people through evaluation courses not just from a bpo standpoint but mainly through appraisal methodology understanding the importance of the various appraisal principles and then putting them through the racket of really understanding what they're looking at so some people choose to offshore all that we keep it in-house um we do everything in here and someone uh every bpa that comes through someone is looking at it um not just doing data validation which we do through technology as well we pull in the local mls data through various data partners um and so that gets validated when the comp is selected so if they say it's two thousand square feet we wanna make sure that public data records state that it is also that um any variances are looked into and checked and then validated and is communicated back to the end user to make sure that if there is some kind of variance okay there was a an added on section so the tax record does indeed say it's 1700 square feet but it's actually you know 2200 square feet it was a legal permissible uh use of that area here's that documentation that we found want to make sure we send that on in addition to that um they go through and we do a nice validation of the the comparable selection itself to make sure so when we're especially on exteriors of certain assumptions that have to be made right what what am i saying from the outside it's going to give me a little bit of an indicator on what's going on inside the house so um we make sure that the comparable selection aligns with those assumptions if we feel like it's a pretty good asset it's it's currently occupied looks like you know based on the exterior maybe there's some general updates on the interior as well we're going to align that with these comparables sometimes we unfortunately have the situation where we see well i think this property is upgraded they've got a bunch of stuff going on on the outside looks good uh but i selected all of these inferior comparables and i aligned the value so we're really looking for those kind of things not just with the tangible locational differences and the things that you can see in the grid but also looking at the pictures of the comparables to make sure we're comparing atmospheres because that's really where the variable pricing is that's what we do on every single one we find issues we send it back um we're kind of stingy uh we've got a fail rate of uh you know we ask a lot of questions we've got a pretty high fail rate around 46 to 57 depending on what it is certainly higher on interiors when there's a little bit more information available um so there's a lot of dialogue between us and the agent we learn a lot about them they learn a lot about us and what we're looking for so we're pretty uh strengthening so what are your typical limitations seem like you guys cover a lot what are things that you guys struggle with obviously time is always a struggle um you know you try doing your best you can do you have any other limitations at all yeah i mean certainly um it's pretty some limitations there's certain things that we'd certainly not want to compromise the safety and security of the agents of doing the inspection sometimes we get some kind of we would like to customize as much as we can and and make sure that we can accommodate any requests certainly for different types of information so in that way your customers could or your your listeners uh can certainly um ask for certain kinds of things but we're not going to put somebody in a position where they're going to go up and looking through a window or go on somebody's private property and put themselves at risk but certainly limitations exist we're not dealing with general contractors so um you know we've got different tools that help us identify repairs and things like that but generally you're not going to trust your real estate agent to understand uh all the different nuances and of different construction protocols associated with replacing cabinets right and give you a general idea but uh i certainly wouldn't look at a bpo and say wow okay well he said it's only gonna cost me 10 grand to fix this house probably not where you want to start we do a lot of different things to try to combat that we've got relationships with exact square and things like that that we can have as add-ons and go through um but um that's generally where we we say okay we've got an expert in the marketplace and buyer nuance and things like that and the emotional things that go into buying a house is where we find real estate agents are really really good they understand how to find you know properties that are going to compete with your asset and give you a pretty good value conclusion they're not going to necessarily be the best at letting you know um how much it's going to take to to fix a problem yeah is there a foundation issue in the backyard that you can't get to yeah and that's and that's one of the inherent limitations with when we're doing it as a note uh it's an exterior so that the interior is a mystery and like you say oftentimes it reflects the outside it reflects the inside but not always and you know there's through nobody's fault i mean that you know there's that's just one of the risks that's one of the inherent risks of node investing is if you take that property back you don't necessarily know what you're getting into when you get inside the front door or back door window whatever the case might be there and with these bpos they often sometimes share the agent's information is there any kind of no no against us reach out the agent if we take the property back if we buy the property a note and we won't need some local assistance is are we allowed to speak to that agent directly yeah i mean in the process there's there's a little bit of a delineation between what we're talking about we always include the agent's information on there so i think absolutely generally a lot of agents do these for the hope that maybe down the line um they can get involved in in that asset somehow as it pertains to actually selling or helping them with that property so in that way absolutely i think if we're talking about trying to get a you know a lot of the point of the dpos to get an independent third party unbiased to get their opinion of the asset so as it pertains specifically to the bpo we typically encourage if you have something that's going on with the bpo or you got a question about it we'll brought that back through us instead of you know reaching out to the agent and potentially creating uh some kind of yeah issue here and if we have a problem with bpo we can say we don't agree with it we want and we would argue that bpo would say whoa why are the comms three miles away we're in chicago it makes no sense absolutely and we hopefully be catching that on the front end but certainly there are situations where there's a decision to be made and the end user doesn't agree with the decision that was made and so certainly um you know we always welcome that feedback come back to us say hey i don't necessarily feel this way or or what about this one i found this one it's the same thing that we do to the agents and sometimes those can get crossed or maybe there's additional information that that you guys are aware of yeah we're not and so we assumed one thing and you know a little bit more about it hey we will go back certainly happy to go back to the agent uh get it changed if we feel like there's a serious issue with the competency of the person who did it that helps us a lot get those people out of the system as well as and we would just get replacement in that situation like parameters that you'd like the bpo agents to follow to say for instance i have one client who is like don't don't give me any reo properties as comps you know if you have those types of you know rules that you want to follow make that be aware that's definitely something that we can cater you know we can't go and knock on the front door to see if someone's there but we can say based on what we see from the outside what is that perceived occupancy at the property so you know there are things that we can do for you that kind of help make it out a little bit easier for you i'll i'll often follow up with uh the whoever it was that did the the bpo and just more for a sense of uh the neighborhood and and what's going on in that particular neighborhood that it might it's you know there may be everything right with that but that's fine and that's great and i'm really happy for that and then i'll follow up and say so you know is there anything nearby i had an example where one was was right close to a it was a football or baseball stadium or something like that which on you know it could be a plus or a minus and and it's just good to know like i don't know that kind of stuff i don't know how you know the proximity to this place or this store or that school even um you know they can are there high power lines behind the property you know what's on the corner yeah yeah and there is tell me all kinds of things and just yeah is it close with school close to a church those kind of things is there a major highway nearby because that's a you know over the railroad tracks kind of the situation a lot of times and oftentimes you can see you know some of those barriers uh like a highway is not too hard to see on a map uh however um i've been in cities where if you cross this street you know i on this side of the street it's this and you know it's not a major thoroughfare or anything like that it's just the locals know that on this side of the street it's like this and on that side of the street it's like that and and how else do you put that on the report you know you can't really so that follow-up is is pretty cool and that's a key thing you're right because there's sometimes for that street maybe a deviation from 1950 that just certain people live in one size or in that deviation you can't see anywhere else and that local person is that local key to everything yeah um so if i go ahead and i want to buy bpo from you guys what is the typical process walk through either new investor or experienced investor are they emailing are they sending a thing online are you logging in tell them about the process yeah so it's really easy for us we have a standardized note investor agreement so you actually not only get will you get bpos available to you but other types of evaluation and also title so read the gate you basically have access to go into your client portal where not only do we keep a document vault of everything that you're ordering but we also email it to you so i have some guys they never log into it don't even know what their password is they email me everything i send it out we have other guys that they love going in there they actually use it as their own file reporting system so you can upload documentation based on the property level we also have it set up where each property has its own kind of title page to it so if you want to order a bpo then say hey you know what i am going to go down through this path and then want to order title on it you can do that as well so we really make it easy it's as simple as putting the address we don't even need the borrower name put an unknown and any special instructions and then we shoot it right off and we treat you guys as if you're the biggest servicer on the planet so we don't have any delineation based on you know who the client is it just goes right up through our network what kind of special requests can we make like are what are some common ones that might come from note investors like i said occupancy so hey can you tell me if you think anyone's there um you know i get sometimes like hey is the electricity on can you see something like that so um we also get notices and postings that can make a big difference so you know if you could get a zoomed in photo on the front to kind of see has it been condemned what's going on there um so just little things like that did you get any other specific requests from any of the larger clients as well uh we certainly had situations where um if it's something that's easy enough we can we can always add our forms are generally customizable to a certain extent um so we're always happy to answer any specific questions and sometimes with some of these smaller deals there might be some additional information that can be provided and that's always welcome too so yeah there's special requests but there's also the capability to say hey i know a little bit about this asset um here it is and you know leverage that uh when you're driving by and seeing hey you know to stay somebody living there how'd you verify that was there a bunch of mail piled up or um you know the lawn mowed all that different kind of stuff uh give me a little bit more color around that specifically because i'm very sensitive to that particular you know items so those are generally the kinds of things that that we get or like description neighborhood description of the neighborhood like you were mentioning nathan like hey just give me a quick overview like what you know what's the neighborhood kind of like so within what they're allowed to do legally as realtors they'll they'll do the best that they can for you right right right that asks how can we ask those types of questions and give a little more information without um breaking down and crossing any lines so you mentioned you've run o and e reports and title reports like that you know these bpos these exteriors ones we really look for right we don't do the interiors until we take ownership of it typically what are the typical pricing that a bpo may cost us and o costs us we got the time frame two three days which is pretty good right you know only i presume would be the same kind of time frame depending on where it's located exactly so it's a hundred dollars for an exterior bpo 135 for interior and for our property reports they based on whether it's current owner if you're doing juniors or it's a two owner or full owner search like you said they do vary based on the state that you're looking at but our turn time for those are two days for two owners they can sometimes go a little bit longer i saw in alabama that the abstractor had to go all the way down to the county and go through the giant books to try and find a death certificate and transfer but they're they're pretty quick we actually have our search team is based out of south carolina and we've got thousands of them that do searches nationwide for full title commitments so they're not saying oh this is just for an eno report it would be doing the same search as if you were getting a full title policy so we'll write out chains of assignments write any notes if there's anything weird gaps that we see we check for bankruptcies and also foreclosures so if you do have to service it and somebody's in bankruptcy you don't get a surprise there uh just things that you know are usually included in our reports so we physically search ones that we have to and you're not just getting oh there we go what's going on oh technology today that's interesting too because the only report is something we really care about and most of the time we don't get the the foreclosure information well sorry the bankruptcy information tied into it that was a really cool key point that um i have not seen before that's pretty cool i didn't hear the pricing yet but i'm sure we'll get that later so one thing i wanted to add in there for so just for the information of the newer investor um when we're talking about timelines so you've put in your indicative bid and then uh you've got a funding date and in between that time is when you do your bpo and your your title search now uh first of all plan that time in so don't say you know all right indicative of bids in today we're going to close tomorrow uh that's not going to work because it takes time to get these reports back uh yes a week 10 days that's fine if for some reason it's going longer than that just say that to the seller just let them know what's going on let them know you know what i'm waiting on this bpo uh it was a place where maybe a more real remote location and we had trouble hiring somebody to do the report in the first place something you know whatever the the case is don't make stuff up but uh i've been times where bpo took a week to get back to what it was it was very rural and they had a hard time getting eaten and they had drive the agent i drive 30 miles and it was a thursday you know like i couldn't get till tuesday yeah um those things happen yeah so but just let them know what's going on and yeah so just ten times out of ten that's fine refreshing the fact that when you make that ticket offer you don't kind of do any of these back end stuff right you know i'm spending money on bpos not spending my on the only report you're really spending money after they accept that offer right right they accept the offer now you're diving due diligence your collateral file your bpo your own e those kind of things are what comes into play you're re viewing the collateral file yeah um are there different types of bpo external is there a different different kind of things you know i've only ordered the one so was there different kinds of o bpos done externally i mean we do a couple of different kinds of bpos so we could do um just a normal exterior vpo with some financial reviews we talked about um one of the things that we like to do here i don't know how wide spread it is across different providers but we also do desktops here as well so we do desktop dpos and desktop evaluations sometimes we did a good example was yesterday bank they needed something within 24 hours they had a an inspection done full-blown inspection like you know full property inspection they provided us that and we completed a desktop in-house so we can do that we can also that was a desktop evaluation we also do um desktop bpos in the same kind of scenario where if an inspection is provided to us or um we've got a situation where we're just going to make an assumption whatever we can find online and they just want to desktop cheaper alternatives in something where we just need to get something quickly or they're just looking specifically for the data within the bpo and not necessarily inspection component so those are options as well if i apologize i caught your computer bug yeah i know it's going around sorry that's all good so the one that we left off with was what's your pricing for the eno we call it on a report eno report uh which definitely that definitely tells you the occupancy and typically the the eno report tells us from the from the person in the time they buy that property till now right the sec 2 party is typically what we don't get into the the 30 years and some of that we want to know because typically when an asset has a title policy on it that protects the back end typically and then ours is just from the one the day they bought it till now what liens have been attached to what's happened to it and things like that so what is your cost for an only report to be right yeah so they do they do vary by state so what i can do for you is i can send you our pdf of pricing if you want to share it with your network they're more than welcome to it's completely transparent so awesome so we do you see all of them prior to them getting sent over and if you have any questions about what you see we encourage every single one of our investors to give us a ring we give you the contact information for our entire search department so you always have somebody that you can physically call that's great because a lot of new investors get scared when they say you know the report they're saying well i don't know what to look at let's see firstly in second liens and i see the list of people what happened here so guys be sure to give a call reach out and say listen i don't understand this right or i'm curious more about this part of it if you question something too i mean we have some states where it's not required to you know actually record the mortgage or if you're dealing with some companies that they bought a whole bunch of assets was it carver something like that they were terrible when they were disposing all of their assets so we see everything that you can possibly think of you know if anything ever seems weird please reach out you know don't feel like you're alone with anything looking in a vacuum i think the biggest struggle we have is when there's water lean like which is extremely difficult because sometimes it's not recorded maybe it's with the city and things like that so oh we had a school tax situation so one of our new clients they had pulled a title report from a different company and found out that that property actually fell on two counties for the school tax and they ended up not knowing they had like a twelve thousand dollar backpack situation so yeah so it really does we actually have all of our note investors i mark them i haven't flagged all as npls so we do a certain extra level of check on taxes for you guys um especially with that share of tax sale situation where you could potentially fall into so yeah yeah i i definitely know what you guys are going for wow that's awesome between those two reports that's like absolute must do and i've been tempted every once in a while to skip and i've shared stories in the past ones where i did skip and it didn't turn out well you you absolutely have to get both of those things done uh even if you think you know what the property looks like no get the bpo get somebody out there unless you looked at it yesterday like get somebody out there that can actually look exactly it's just the risks nathan right so you'll count 100 for bpo title reports you know they're what 85 to maybe 165 based on like the crazy states you know but you're getting full tax information and things like you know if maybe you're only paying five six thousand for you know one of these properties in a bigger pool but it's gonna cost you you know 15 grand down the line like no way yeah so it's just not worth it and those who haven't seen the reports before typically they have a collateral attachment sort so you're going to see other reports on here so you can see additional stuff like the foreclosure stuff so guys if you're buying an acid one e is always a must right yeah and the bpo knowing that value because anything could happen yesterday and that's the problem a fire a house burned down whatever the reason is all those kind is going to happen and have that local agent is a local handful for you right so if you need to know something or if you reach out to them later listen i need to do another drive by word about the foreclosure situation can you just drive by the property sure in that connection you have is something valuable when you take the property back and you need someone to help you with the disposal of property they're there they're that local connection yeah yeah and and having the title and then having that agent in place um is so so so key and and i i gosh the majority of time i don't have any wouldn't even try to put a number on it but the majority of the time the person who did the bpo is my agent in that place in that city in that town or whatever it is and it's just you it's an absolute shoe and then from the from the agent they usually have somebody that can do the clean out they usually know a locksmith that they use and trust um they'll they'll have all kinds of other resources that that you're gonna need we talked a little bit beforehand about different code violations you know if you end up having a property that's in dismal condition you know you could be getting you know dave you're in new jersey we had a situation with a servicer they got a property it was like 200 000 in this historic district in new jersey and had to go and call and you know basically just say hey we've got the property now we're taking it over here's when someone's gonna be out there and really got those down but it's you know you never know what you face if you don't physically go to the property you just have no idea yeah yeah it's so so key always always always you know and as bpos change and they adjust you know some of the key things that people miss on the fact is the roof conditions like that you know you can definitely see sometimes with the roof uh brandon are you guys exploring the whole idea of doing drone work at all is that something it's coming out about to see the roof condition because you can't see it from street level um it's one of those things that we're not finding it all that uncommon for many of our agents to have and so it might [Laughter] uh just for those situations um where we can um we're starting to to do a little bit more work with with some people in the fix and flip space that are looking for those kinds of things um so absolutely i think we're on the cusp of probably turning that corner and getting uh a network um we've actually started you know two of our enhancements that we've got kind of focused in systematically over the next few months is being able to identify which of our agents you know we we're used to saying okay do they have a license and do that you know and all that kind of stuff now or do they have a drone part of the selection criteria because we've got very specific uh needs as we try to you know work our way is how we can help people in that space that's a really huge thing how do we bridge that gap so as i spoke earlier you're not necessarily going to trust a real estate agent to give you an exact price that a contractor would on it but as much information that we can provide to help in those scenarios how can we make sure that we can provide that so that's absolutely on our radar and it's a focus room that's awesome so guys as you heard here bpo zoneys they're they're actually catering to the new investors versus bpo companies they're really big who just cookie cutter stuff together which is frustrating because a lot of times a they have no clue what we actually want or need they can't actually really focus what they're look what you're looking for it's key here right knowing a local condition asking a particular question hey listen is there any kind of situation here that i should be aware of or concerns you know locally and they each you can answer that question right and those kind of things um my last question i'll let nathan get his last question too is is there a situation you've got come across where things weren't as google maps shows to be or you know investors like wow this just surprised me anything on a bp over surprised you guys or jump out there just was shocking oh yeah we've got them where we were talking about before you go there's supposed to be a house there google maps from five years ago says that there's a house there you go and it's a concrete slab and we've actually had it where the investor came and he was like you you went to the wrong property you guys went to the wrong property you made the mistake go back and we spent an extra like two days doing the research sent you know guy back out everything else no house there got the apology said thanks so much for double checking for me but uh it happens i mean you just and my one investor he had two fires in the same month so you could have a front of house look good and then if you're going up the street looking at the side like nathan said before it's just not there so um it is almost like the wild west right so it they are your only line of defense in that actual local neighborhood brandon you've done it long enough what's the weirdest thing you've seen my uh there's i've got two favorites probably one of my top was was we went and we were expecting to see a mobile home a manufactured home there and what we saw was this gigantic poorly constructed monstrosity and as we kind of investigated a little bit more what we found is they uh left the mobile home intact in the middle and started building around it and made it you know whatever a it was a single wide originally and and turned it into this 3 000 square foot structure the bathrooms because they didn't like they didn't leave any plumbing so the bathrooms were still where the bathrooms were and you know it was this very fun thing i think the other thing i saw was a pool conversion we had a pool conversion where they roofed it and somebody lived it was it was an ancillary unit it was advertised as a two unit property oh my goodness california and they had actually just put something over the pool and somebody was living down there and they had a vent that ran down to get the air circulation it was but it was like full on it like started at three feet goes down to like eight feet the bed was over here in the corner it was it was rental income we've seen some crazy things so get get the inspection done definitely find out what you're what you're buying ethan maybe that's on your uh your list of those notes coming through maybe it might be we'll see no it's it's a hundred bucks and yeah it's it's so worth it to get you know that hundred dollars have somebody out there and just have a look and just know for sure especially especially i mean if you're going to go drive by yourself i guess that's one thing personally i would still rather have a realtor go by and and let me know what they know about the neighborhood because even if you know it's the town next door it could be a totally different neighborhood and you may not know what you think you know and the realtors do yeah especially cleveland like where i'm from it is street by street right so you've got multiple different zip codes with that cleveland name and it just really all depends yeah absolutely so nathan let you uh ask the final question yeah what do you guys see coming down the pipe have you seen any trends um coming out of covid anything that's been different that indicates any future performance we'll leave it open like that so i was actually talking about my girlfriends and servicing so she works at a very big servicing house and she was saying that the reason why you're just not really seeing any defaults right now is because the regulators are working to making sure that there is a stream and not a waterfall of them so the kind of view is that they are all still coming but they're going to be coming more on a scattered approach so i know nobody really kind of wants to deal with that having their legacy with another like 2008 crisis but she said that they're still kind of just ramping up and waiting for it so interesting interesting brandon what are your the property said yeah what do you think property-wise i think generally i think there's been a long line of situations being pre-coped we felt when we started everything that we were probably on the cusp of a little bit more of a default wave uh covet i think kind of temporarily bailed out some of that uh situation i think there were a lot of people that found themselves delinquent and then found themselves with relief right um so i i think that there is certainly things it's hard to say this was a very unique situation because it is very hard to say but based on what we're seeing i mean a buddy of mine just bought a house he missed out on two houses and he was 30 40 000 above the list price on his offer uh with conventional financing uh in a big down payment he had to go as far as 50 i think he ended at 52 000 above the list price in order to get looked at he did get that house one of our employees neighbors uh they uh they ended up selling their house for 70 000 above list and there was 40 offers um you know on that property in two days so i think there's definitely a supply problem uh all across the country certainly in north texas and yeah i i think that will help stabilize out some prices um as we go and i think there's gonna be a lot of opportunity um but i think it still we still might have a bunch of craziness as that supply starts to and people have money to spend so yeah it's definitely a weird comment right now because we're seeing the same thing in new jersey prices are still crazy over list price is normal uh one of my good friends runs a very large reo division uh for a big fund and he's like i can't if a property gets bid everything's as is and if you're not above list price i'm not even looking at it it's just wild and he's imagining you know 800 plus reos and he says dave it's unbelievable what we're dealing with might be actually they're getting like 30 or 40 a month still and he's like listen i'm dwindling down quicker this is great i'm selling properties faster as is no questions yet no contingencies and it's amazing right now for him um we're seeing assuming our proper values right in our side me nathan's talked a lot of people there's not many defaults going on our side either we're not seeing the default levels like we all expected to um but at this point our values are going up at the same time which is it's like florida for the whole country right now for us so that's interesting so well guys i think time hotel time hotel yes stacey oh i was just going to say you know before cobia and everything it looked like the price of performing notes were going up are those skyrocketed right now like is it better off you know to take a risk for a non-performing and kind of look to see what you can get from a you know why did they kind of go you know dirty for a little bit or is it safer just still to pay a little bit more and go that performing route than what you feel that first knives that's a that's a tough question um obviously part of it depends on your risk level uh and your your tolerance uh for myself i've always done npls and so because i like the discount more than anything else and i don't mind putting in the work um if you're looking for something just in retirement that you don't have to do anything with and touch it's probably worth it to spend a little bit more and just get a performer and let it ride so it's it's i think it's still in the realm of personal preference whatever you're more comfortable with i would say performers are really high unless you're an individual investor just trying to get rid of their portfolio i have three assets just trying to sell them off you can usually sneak them away but yeah performing notes are expected to get 90 95 percent of you know of upb even with a three or four percent coupon it's really wild even non-performers are high priced now where you know when we got big we got started we're buying at 30 cents you know it and there was no way to get above 65.

we're seeing it sometimes not before i'm selling it 70 75 and everything's up and the reason being is for my understanding is we kind of tailor along reos and reos are up right they're above what the really the value of the property is so we're just tailing behind it we're always a percentage below it and because it's over 100 our mpls are getting priced high like you know buying at 65.70 is ridiculous five years ago but now we're seeing a lot of that people winning those offers those kind of things we're also seeing people getting in the space making offers that are just not so smart sometimes and they're also helping drive that price up yeah so yeah pricing is just what it is across the board with real estate um it's just wacky rocky so and that you know subject to change who knows yeah we're open so right yeah i always like to ask guys what they're investing in when they come on board too so it's fascinating to see kind of the breath that you know is within your industry too so yeah yeah so 100 ways to skin this cat there there are so many ways to do it so many angles to play here yeah well guys i thank you so much for your time i appreciate your wealth of knowledge sharing information but also what you guys are doing for the node space and really focusing on it so that you can help out even the advanced investors as well as the beginners and holding them a tailor to it to make it more comfortable getting an asset outside your backyard is probably the most difficult thing that people convert over from real estate to nodes to do and having that trust and insurance that that property is secured by tools and resources that you guys can provide makes it a lot easier for the investor to get into it so i thank you for things where we know it's hard to get fifteen thousand dollars to buy your first note i personally don't have it i gotta start off jv but um it's one of those where you know we we can try and treat it like it's our own money so we do get it yeah definitely yes it's a hundred dollars but it's a hundred dollars right so we want to make sure you're getting value for that so yes we want to put as much as we can into it and make sure it's something that's valuable to you worth more than a hundred dollars this should be anything for you so we want to make sure that it's not just um you know just a piece of paper that i got the pictures and that was the only thing that was really worth it to me more than information that's awesome well guys have a great weekend thank you so much for joining us thank you thank you so much for having us next week we'll be on again guys nathan enjoy your weekend man yeah your dating goes well absolutely enjoy have a great time hey fellow no investor are you looking to learn the basics of note investing so you can get started however you don't want to spend a few hundreds or thousands of dollars and hours online on some training program have you thought about attending a notes conference however you don't want to spend the money or the time away from your family well we have a tremendous beginners video series of 20 different topics with each video being less than 15 minutes this means each video is less fluff and direct to the content visit www.jkpholdings.com beginner dash series to learn more again www beginner dash series [Music] what's up everyone dave what's up from jkp holdings alongside me nathan turner how are you doing i'm doing really well it's good it's good it was one of those weeks i'm um i'm looking forward to the weekend but i think we've had a really good week so i'm excited to know what comes to store next week we have some things prepping up that we're really excited about um in our weekly facebook uh our mastermind group that we run weekly is uh pretty interesting because we're doing a lot of stuff that um is out of the orders that's really really cool um and we're building up to the big reveal for that for our internal thing um for assets we've seen a little bit of low but we've actually seen different assets from like lease options and some of that coming from recently some commercial opportunities that we're diving into some actually in pa some in new jersey some in texas so that's kind of coming up a little bit which is pretty interesting so i'm kind of curious to see what that looks like i'll have to get with you on those lease options and stuff i we're not looking at the same tape so i'll yeah also if you're interested i was just telling you offline here i got these california loans interesting they're interesting so uh we'll talk later yeah if gabe's out there man listening will be uh talking to you soon i'm sure um so with note investing one of the big things that people have troubles with is knowing the property right that's one of our key things in our first space is knowing who's involved but also the paper with the property for the note space seconds care more about the borrower than than we do in the first place we're going to focus on that property making sure that property is something that we know that we have taken back what's it what's the best idea of value now we know that sometimes we do some rehab concerns but unlike anything else we can't get into the property and see it and for people who are investing outside their boundaries driving by property property that is not possible what do they do yeah and that and that's a really good point and that's one of the big biggest differences with the the due diligence when you're talking about the difference between the where'd dave go we lost him [Laughter] we got this yeah the the due diligence between the uh the first and the second is on that on the first you you're very much concerned with the property because there's a good chance you're taking that property back so you want to know as much as you can about the property whereas the second you're spending a lot more time on the borrower where for myself as a as a first buyer i hardly give the borrower a second look like other than if they're living or not that's my main concern uh really good point nathan like these properties are not in your backyard right so i have one investor that he actually was lucky enough to be able to only buy properties on his truck route but if you're buying a tape in indiana somewhere you know you can just go out there and drive by to kind of see like hey do these kind of seem like they're upstanding people is the grass cut you know is the roof caved in is there even a property still there so i mean we've seen it all so you bring up a really good point that need for the actual physical due diligence portion of it somebody's got to actually look at the property and that's and that comes from even first-hand experience when i first got started i did drive the mall way back 2008 i rented a car and i drove around ohio and michigan and indiana which was actually a really good exercise because i got to know those areas quite well but quite literally i would go buy we had an address and i'd go by and it was just an empty field and so we didn't have what we thought we had so somebody whether it's me or somebody else somebody has to go and lay eyes on that property and just see what's there is there is there a tree through the roof i've had it where the front of the building looks fine and around the side the whole side of the the house is caved in whoa sorry about that guys i'm not sure what happened there was something completely blank for like two minutes like i'm gonna just reconnect here and see what happens that works you're back all right i'm just talking about some of the some of the things we've seen where um sometimes that property is not what she thought it was it's certainly not the same oh my god no naps so we're talking offline before we connect with everybody here how weird it is where i was going to property 2013 2014 and just so happened i you know i won look at the back of the house so i went on google maps and i was just taking a peek before i dove in too much and the property's missing and this is whoa i must went too far yeah the corner lot gone yeah and i if i didn't take a look at the backyard i wouldn't have seen it there's people in the front steps the mailbox there like this doesn't make sense to me what happened right it was gone so bpo situations we get into is is somewhat helpful to know where that property is in condition but we're gonna dive into more even more reasons why bpo is definitely helpful to know not even if the property is there but more about it how the local boots on the ground especially if you're going outside your boundaries yeah at the very very least you need somebody to lay eyes on it at the very least yeah after that then there's there's all the other uh all the other stuff that comes along with that bpo and that's why we've got these guys here to help us uh that's a big thing right if you're buying it performing or non-performing you may have to go through disposition and if some place is a total just disaster hey maybe it's better to do everything you can to get a payoff by the buyer then try and go and you know see what it's like taken to auction or anything like that right now property values are insane so it's worth getting that bpo to kind of see what your potential upside is yeah bare minimum i probably nine times out of ten i would rather not take back the property just because it's less to deal with and we've talked about that before about how much easier a note is to deal with than it is than a property however like you say especially now with property values going up that prospect of getting the property back maybe isn't so bad uh and perhaps even more desirable and so that's it's at least a consideration something to to kind of look out for yeah so it's weird you know bpo is something that people sometimes hate to do because they're like well you know i might take the chance the small investment or what's the worst situation going to be involved and the worst can be really bad thousands but the best thing about it is most people don't realize from google maps and bing maps is they're not up to date yeah we've been situations where that property has tremendous upside in the last year since google maps updated and you don't know and you don't know what the situation is we've had times where the the agent goes out and they just happen to come across a situation that they just luckily got to where they saw something and told us right hey listen yeah we saw we couldn't go close to there's some people living in the house oh it's occupied right this is good information yeah i saw a ramp built for the handicap whoa there's medical situation going on here that we may not know little things so hey or you could find a brand new boat in the driveway and somebody's not making payments so we've seen those too yeah absolutely so let me let's back up here and let brandon and stacy what times what are the typical times that people buy bpos what are typical investments they use bpos for i take that brandon sure i mean really anytime somebody wants to get a bpo is generally a when there's maybe more than just a little bit of risk involved uh when they need to know a little bit more about the asset um we see them in in all sorts of fix and flip situations and really anything i mean we see a bpo being ordered um anytime anybody just wants to know a little bit more information about the asset or a little bit more about the environment in which it's in the neighborhood uh different comparable selections of data different things like that so we see them all the time in all sorts of different components of the process not only in the investment space uh dave but we also assume in the servicing space too so as you've got properties that are going into default really the servicer is going to understand okay we need to do a modification really what's worth it here what do we need to go about for our process so they'll get ordered way up in the line after property first starts going delinquent just to see okay what's the situation what is our plan now with the borrower so it's not only just guys that are investing in a few notes you know we've got huge um also capital market investors that are using them for their portfolios as well so maybe they're looking to do a trade get something off their books they'll do them along with avms you know before even taking that next step that action so let me just jump real quick let's define what bpo stands for and is it always done by the same person so brandon what does bpo stand for those are not familiar with it absolutely it's a broker price opinion and so uh typically what occurs or generally what occurs is that it is a we contact a real estate agent in that local market they go and take photos of the property depending on which company you're dealing with you know it may vary in the requirements for instance we asked to provide a front photo both sides uh both views of the street what the subject faces we have some very detailed photos if it's an interior we want two photos of every room from a different angle one point slightly up one point slightly down from opposite corners of the room so we can get a good general idea of what's going on in that property um and then they're going to look for three sales comparables and three active list comparables they're going to make some assumptions based on what kind of property it is or what what kind of inspection it is right if it's an exterior we've got to make some assumptions we state those assumptions in ours and then they come to a price conclusion based on their expertise and their experience so um generally that's what's uh required uh for bpo and is it done by brokers all the time it can be done by agents generally done by real estate agents i would say probably anywhere between 25 and 35 percent of them are actual brokers that do them generally they're just working with a brokerage and it's mostly most of our panel is just a real estate agent so we need to back up just for a second we never introduced you guys brandon uh from acura group who wants to introduce the company so yeah let's back up yeah my disconnect so stacy can you share a little about who acker group is and absolutely how did you get into space and what was the background of this yep so i started with akra group about a year ago we are a nationwide amc that does title evaluation work all across nationwide so we had no footprint in the note investment space whatsoever so we are the largest provider of title and valuation in home equity so we work with like bank of america wells fargo chase those kind of guys i actually have friends who i've worked with at prior companies that i said hey do you guys ever use like title reports bpos and kind of got my hands slapped it was like what do you think we do so um i got a crash course in note investing i got some links and books that i purchased um also sent to me and kind of developed this space for accurate group that really is coming in as being a better partner and a better solution than trying to go into different markets to try and find what you need maybe getting something all the time but you're not happy with it but really there's nowhere else to go so trying just to come in and say hey we've got this 20 years expertise we are actually nationwide you know not just a few big cities across the us you know we'll be here for you if you have questions on something if you know you're getting a report that you're like this doesn't make sense you can actually ask us those questions and all of our team is based here in the us that we actually you know brandon will go through his qc process but we really double check everything before it gets sent to you so it's nice that we've been able to come and grow in this space just by doing what we do every day and really being able to offer you guys solutions and the accurate no point intended but point intended uh to get you the information that you need for your investment decisions awesome pretty good all right so back to bpos then well brandon how did you get in the space what did you come from what was your background well i uh i got out of uh out of college i came to um just was applying for different jobs and ended up at a company called the mortgage logic and uh worked there for 12 years and later started my own bpo company after that there was a couple of acquisitions we went to assurance and then it became part of zone and i uh went off and started my own bpo company uh here and we've been doing this for uh three years and working very closely with acura group so um yeah it's been it's been a fun fun ride 15 years in the evaluation space i've been an appraiser uh oh wow that fun stuff so yeah that's awesome very cool good good good experience so i don't know if you add this on to your your comment about pictures and i how do we know that that's the property that we asked for absolutely so a couple different ways uh we can do uh that validation so obviously uh with the technology that's come along with uh with geo um metrics and all that kind of stuff as it pertains to looking at maps that that are there and then leveraging the data that's actually in the photos we validate it that way technologically and then through the other means right of just making sure we look if we would ask for an address verification photo generally if it's not there then we do our due diligence by either going back looking at google maps looking at a previous listing if there has been one really any means that we have the capability to do to make sure that that's the same problem cool okay good so you know when we order bpo how long does it typically take to get one back obviously depending on the area but what's the typical time frame that we can expect them to return yeah absolutely i was actually just pulling timelines last night for uh for some of our team over there um so for our average exterior time which is includes nationwide it includes pearl wyoming and includes uh fort worth texas it's uh uh in business days about 2.9 days and then our calendar base is about 3.67 for an exterior looking at two to three days um and then for an interior really depends on the access if it's on a lock box it's unoccupied those generally don't take more than three to four days if it's a situation where it's an elongated situation that could take a week or we gotta work it out with a borrower all that kind of stuff so here's a little bit hairier but our average time is less than five days on an interior assuming we don't have any of those challenges so nathan what have you done so good stacy i was gonna say brandon we started talking about the qc process that you guys do for the photo uh verification of the location what other qc steps do you guys take prior to delivering those final bpos yeah absolutely there's a there's there's always a question when you're when you're dealing with um opinions price opinions which it's in the name right so there's always a question of accuracy and credibility and all those kinds of things so when we look at q when we look at qc as a general term i can't speak for what other companies do i can only speak what we do specifically uh but generally every company is going to have some kind of gc process but to explain kind of how we do it we we've got a lot of focus on who is performing the report right quality i was always going to start with who's actually doing it so we've got a lot of focus on who is completing that report having a history and making sure that that's an experienced individual that has some knowledge about that specific market and then going from there once we feel like we've got the right person to do it in addition to all the normal technological rules engines and things like that just normal questions throughout the report uh we have valuations expertise in house so everybody that has been working here has been um doing this for over seven eight years some of these folks have been working for me for 12 years they've been a long-standing team these are people with a lot of experience we put people through evaluation courses not just from a bpo standpoint but mainly through appraisal methodology understanding the importance of the various appraisal principles and then putting them through the racket of really understanding what they're looking at so some people choose to offshore all that we keep it in-house um we do everything in here and someone uh every bpa that comes through someone is looking at it um not just doing data validation which we do through technology as well we pull in the local mls data through various data partners um and so that gets validated when the comp is selected so if they say it's two thousand square feet we wanna make sure that public data records state that it is also that um any variances are looked into and checked and then validated and is communicated back to the end user to make sure that if there is some kind of variance okay there was a an added on section so the tax record does indeed say it's 1700 square feet but it's actually you know 2200 square feet it was a legal permissible uh use of that area here's that documentation that we found want to make sure we send that on in addition to that um they go through and we do a nice validation of the the comparable selection itself to make sure so when we're especially on exteriors of certain assumptions that have to be made right what what am i saying from the outside it's going to give me a little bit of an indicator on what's going on inside the house so um we make sure that the comparable selection aligns with those assumptions if we feel like it's a pretty good asset it's it's currently occupied looks like you know based on the exterior maybe there's some general updates on the interior as well we're going to align that with these comparables sometimes we unfortunately have the situation where we see well i think this property is upgraded they've got a bunch of stuff going on on the outside looks good uh but i selected all of these inferior comparables and i aligned the value so we're really looking for those kind of things not just with the tangible locational differences and the things that you can see in the grid but also looking at the pictures of the comparables to make sure we're comparing atmospheres because that's really where the variable pricing is that's what we do on every single one we find issues we send it back um we're kind of stingy uh we've got a fail rate of uh you know we ask a lot of questions we've got a pretty high fail rate around 46 to 57 depending on what it is certainly higher on interiors when there's a little bit more information available um so there's a lot of dialogue between us and the agent we learn a lot about them they learn a lot about us and what we're looking for so we're pretty uh strengthening so what are your typical limitations seem like you guys cover a lot what are things that you guys struggle with obviously time is always a struggle um you know you try doing your best you can do you have any other limitations at all yeah i mean certainly um it's pretty some limitations there's certain things that we'd certainly not want to compromise the safety and security of the agents of doing the inspection sometimes we get some kind of we would like to customize as much as we can and and make sure that we can accommodate any requests certainly for different types of information so in that way your customers could or your your listeners uh can certainly um ask for certain kinds of things but we're not going to put somebody in a position where they're going to go up and looking through a window or go on somebody's private property and put themselves at risk but certainly limitations exist we're not dealing with general contractors so um you know we've got different tools that help us identify repairs and things like that but generally you're not going to trust your real estate agent to understand uh all the different nuances and of different construction protocols associated with replacing cabinets right and give you a general idea but uh i certainly wouldn't look at a bpo and say wow okay well he said it's only gonna cost me 10 grand to fix this house probably not where you want to start we do a lot of different things to try to combat that we've got relationships with exact square and things like that that we can have as add-ons and go through um but um that's generally where we we say okay we've got an expert in the marketplace and buyer nuance and things like that and the emotional things that go into buying a house is where we find real estate agents are really really good they understand how to find you know properties that are going to compete with your asset and give you a pretty good value conclusion they're not going to necessarily be the best at letting you know um how much it's going to take to to fix a problem yeah is there a foundation issue in the backyard that you can't get to yeah and that's and that's one of the inherent limitations with when we're doing it as a note uh it's an exterior so that the interior is a mystery and like you say oftentimes it reflects the outside it reflects the inside but not always and you know there's through nobody's fault i mean that you know there's that's just one of the risks that's one of the inherent risks of node investing is if you take that property back you don't necessarily know what you're getting into when you get inside the front door or back door window whatever the case might be there and with these bpos they often sometimes share the agent's information is there any kind of no no against us reach out the agent if we take the property back if we buy the property a note and we won't need some local assistance is are we allowed to speak to that agent directly yeah i mean in the process there's there's a little bit of a delineation between what we're talking about we always include the agent's information on there so i think absolutely generally a lot of agents do these for the hope that maybe down the line um they can get involved in in that asset somehow as it pertains to actually selling or helping them with that property so in that way absolutely i think if we're talking about trying to get a you know a lot of the point of the dpos to get an independent third party unbiased to get their opinion of the asset so as it pertains specifically to the bpo we typically encourage if you have something that's going on with the bpo or you got a question about it we'll brought that back through us instead of you know reaching out to the agent and potentially creating uh some kind of yeah issue here and if we have a problem with bpo we can say we don't agree with it we want and we would argue that bpo would say whoa why are the comms three miles away we're in chicago it makes no sense absolutely and we hopefully be catching that on the front end but certainly there are situations where there's a decision to be made and the end user doesn't agree with the decision that was made and so certainly um you know we always welcome that feedback come back to us say hey i don't necessarily feel this way or or what about this one i found this one it's the same thing that we do to the agents and sometimes those can get crossed or maybe there's additional information that that you guys are aware of yeah we're not and so we assumed one thing and you know a little bit more about it hey we will go back certainly happy to go back to the agent uh get it changed if we feel like there's a serious issue with the competency of the person who did it that helps us a lot get those people out of the system as well as and we would just get replacement in that situation like parameters that you'd like the bpo agents to follow to say for instance i have one client who is like don't don't give me any reo properties as comps you know if you have those types of you know rules that you want to follow make that be aware that's definitely something that we can cater you know we can't go and knock on the front door to see if someone's there but we can say based on what we see from the outside what is that perceived occupancy at the property so you know there are things that we can do for you that kind of help make it out a little bit easier for you i'll i'll often follow up with uh the whoever it was that did the the bpo and just more for a sense of uh the neighborhood and and what's going on in that particular neighborhood that it might it's you know there may be everything right with that but that's fine and that's great and i'm really happy for that and then i'll follow up and say so you know is there anything nearby i had an example where one was was right close to a it was a football or baseball stadium or something like that which on you know it could be a plus or a minus and and it's just good to know like i don't know that kind of stuff i don't know how you know the proximity to this place or this store or that school even um you know they can are there high power lines behind the property you know what's on the corner yeah yeah and there is tell me all kinds of things and just yeah is it close with school close to a church those kind of things is there a major highway nearby because that's a you know over the railroad tracks kind of the situation a lot of times and oftentimes you can see you know some of those barriers uh like a highway is not too hard to see on a map uh however um i've been in cities where if you cross this street you know i on this side of the street it's this and you know it's not a major thoroughfare or anything like that it's just the locals know that on this side of the street it's like this and on that side of the street it's like that and and how else do you put that on the report you know you can't really so that follow-up is is pretty cool and that's a key thing you're right because there's sometimes for that street maybe a deviation from 1950 that just certain people live in one size or in that deviation you can't see anywhere else and that local person is that local key to everything yeah um so if i go ahead and i want to buy bpo from you guys what is the typical process walk through either new investor or experienced investor are they emailing are they sending a thing online are you logging in tell them about the process yeah so it's really easy for us we have a standardized note investor agreement so you actually not only get will you get bpos available to you but other types of evaluation and also title so read the gate you basically have access to go into your client portal where not only do we keep a document vault of everything that you're ordering but we also email it to you so i have some guys they never log into it don't even know what their password is they email me everything i send it out we have other guys that they love going in there they actually use it as their own file reporting system so you can upload documentation based on the property level we also have it set up where each property has its own kind of title page to it so if you want to order a bpo then say hey you know what i am going to go down through this path and then want to order title on it you can do that as well so we really make it easy it's as simple as putting the address we don't even need the borrower name put an unknown and any special instructions and then we shoot it right off and we treat you guys as if you're the biggest servicer on the planet so we don't have any delineation based on you know who the client is it just goes right up through our network what kind of special requests can we make like are what are some common ones that might come from note investors like i said occupancy so hey can you tell m....